Economics is fundamentally unscientific. The economic crisis has speeded the shift of power to emergent economies. In Britain and the USA the theory of 'rational markets' removed controls from the finance sector, and things can still get yet worse. Read my book, No Confidence: The Brexit Vote and Economics - http://amzn.eu/ayGznkp

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Wednesday, 30 May 2012

There is no doubt that the USSR regarded Britain as a potent enemy during and after the Second World War. After Hitler launched his Blitzkrieg on The Soviet Union, Churchill openly said that if Hitler invaded Hell the British coalition government would make a pact with the Devil: the read-across from 'Devil' to 'Stalin' was unambiguous.

While Churchill ran the war with the support of his inner War Cabinet, the Lord President of the Privy Council - Clement Attlee, the Labour Leader - effectively ran the home affairs of the nation as Chairman of the Lord President's Committee of the Cabinet. When the war ended, Attlee became the Prime Minister, pledged to a programme of specifically democratic socialism in which he was constantly harassed by Moscow-supporting Communists who campaigned overtly and covertly, most obviously by infiltrating the trade unions which both provided funding of the national Labour Party and local support for MPs and Councillors through Trades Councils. Other significant fields of infiltration were the expanding universities and 'higher journalism': a very limited number of people wrote editorials and think-pieces in the broadsheet newspapers and in the upper-end periodical magazines. In those pre-television days the fashionable commentators also got a platform on BBC radio. Among their un-idealogical pupils and followers the 'fellow travellers' disseminated a dogma that Britain had done magnificent things in the war, but that this had been the last hurrah of an exhausted political and economic system: Britain was now finished. We should give up the Empire - let tiny cohorts of Marxist guerillas take over one colony after another, just as quickly as Moscow could train and equip them, and thereby save British soldiers from risk in confronting them. The government should reduce the defence establishment while it taxed incomes and inheritances so heavily that the aristocratic and capitalist cohorts would be squeezed out of existence in a few decades. This would leave the country to be led by a 'meritocracy' of people whose qualifications for power would be based on education and experience: assessed and monitored by the cohorts who were most heavily penetrated by the inspired left.

The political right was too powerful to be submerged. There was a strong corps of right-wing intellectuals, especially in the older universities, who could keep key posts from capture by disruptives. The military and the civil service mostly stuck to the plain meaning of their oaths of loyalty to the Crown. Religious institutions remained strong and largely uninfluenced by the left; and the most powerful trade union leaders had obtained and retained their positions by confronting assaults from the left, which left people like Ernest Bevin among the strongest and most-aware resistants to left-wing 'entryism'. This resistance did not defeat the left; it forced them to adopt Fabian tactics [named after a Roman commander who waited for the right moment to strike, despite the frustration that his approach provoked in many of his contemporaries].

The right also settled down to a long and largely unheralded strategy of defence: by a mixture of influence and 'philanthropy' conservative graduates influenced appointments in universities; magazines [most notably Time and Tide] were funded heavily by UK and US institutions to counterbalance the prevalent left tendency in 'heavy' journalism.

Meanwhile the mass of the population was presented with a policy that was essentially the Roman model: bread and circuses, paid for by exploiting the empire. As the empire shrank in area as as Britain's former preponderance in global trade shrank with it, the limits to taxing the rich were quickly exposed. Spending on investment [which had largely been paid through defence procurement] was reduced dramatically, leading to the decline of shipbuilding, aviation, computing and a massive range of other industries over four decades between the 'sixties and the 'nineties. As industry declined, the options of allowing credit inflation and 'selling the family silver' - disposing of the nationalised industries - became the preferred methods for balancing the books as the state spent vastly more than the economy earned.

This came to a head in 2007-8, but it had been inevitable since at least the mid-sixties, when the policy of handouts regardless of earning-power became evident. The major factor in making this bizarre impossibility the reality was the charade of democracy by which politicians acted out a shadowy conflict that blinded almost everyone to the economic reality. In this they were abetted by Economists, whose normative models transcended material reality. This blog has spent a lot of words on trying to present that situation in palatable doses. it has repeatedly been pointed out that a major component of the current incomprehension is the fact that the inventors of Economics progressively dropped the older and mature science of Political Economy as the fantasies supported by Economists became increasingly discordant with the truths exposed by the older science. Over the next couple of weeks I will lay out the Principles of Political Economy for the twenty-first century. People may now become willing to pay attention, as the evidence of failure of Economics and of charade-Politics becomes more blatant.

Friday, 25 May 2012

Greece is likely to leave the eurozone: I have said it ever since the bubble was exposed and it becomes more likely every week. More and more Greeks resent the restraints on public spending that have been imposed [not just by the EU, but more significantly by the IMF] to correct the inane profligacy that the eurorats studiously ignored for more than a decade. So intoxicated were the Brussels sprouts by their power to exploit the inertia and ignorance of the pseudo-statesmen who were notionally their political masters that they just pressed on with the delusory agenda of full integration that assumed - contrary to available evidence - that all eurozone members were behaving 'responsibly' according to EU treaties and agreements. Ancient Greece was a slave-powered society: Greece today is bound by truly oppressive rules imposed by aliens. The Greek situation is so extreme that once it is tackled by measures that can be given a fair chance of bringing the economy into balance, the other enfeebled eurozone economies can be ring-fenced affordably to the rest of the European Union; possibly even including contributions from Sweden and other EU states that are outside the eurozone.

Investments that might be made in Greece after exit from the euro, by public sector and private investors from Europe and beyond, could support substantial growth of the 'real economy': but only if the investors are sure of the security of the investments. Foreigners will not invest if their assets could be written off by hyperinflation, or if they faced a high probability of being nationalised, or be immobilised by strikes that freeze the stream of revenue. Similar strictures would apply in any eurozone country where investment was sought for projects devised to strengthen productive resources or improve the infrastructure: Italy, Spain, Ireland, Portugal and - potentially - France.

The experience of several countries that have tried quantitative easing [usually explained as 'printing money'] is that the 'new money' is not used to buy industrial assets or stock in material trade, but to enable the central bank to buy bonds that might otherwise plummet in price if there were no buyers. The propaganda machine says that the intention is to sustain real economic growth: in reality quantitative easing is an additional way of shoring-up 'banks' that brings a huge threat of future inflation of costs and prices [and an additional erosion of personal wealth]. The players in financial markets are very clear of the real nature of this charade and they will not support any such policy by buying bonds issued by a government that is not pursuing serious economic discipline. Thus in Europe there is a strong lobby - led by the less-responsible governments - for the creation of 'eurobonds' that would be guaranteed by all eurozone governments. The funds thus accumulated would be lent to countries and to banks that found it difficult to raise funds in other ways. In effect it would be slightly covert way of getting Germany to shore up financial institutions in Spain, Italy, Ireland, France [and possibly even Greece]. It is absolutely unsurprising that Germany is resisting this.

But now the evidence is unequivocal that the eurozone is in danger of collapsing, with or without Greece, so the Germans have indicated a willingness to consider issuing 'project bonds' with some sort of eurozone backing [perhaps through the European Central Bank]. This would stimulate employment and spending in member countries by building roads, airports, housing estates and other infrastructure that would have demonstrable material existence. The buyers of the bonds would become the indirect owners of the assets, and could be recipients of interest payments directly raised from the assets: this would give a limited guarantee that the money would be properly used according to the intention of the investors. That guarantee would only be as good as the legal system and the economic order within which the investment would take place. Politicians are fantasisers, liars and cheats: the investments would have to be ring-fenced from political chicanery; then the idea may begin to take up some serious attention.

Friday, 18 May 2012

Oliver Cromwell's ruthlessness was well recognised after his intervention in Scotland, but his subsequent activities in Ireland became legendary even in that age of brutal religious warfare; they were to be cited for centuries after the massacres that he unleashed in captured cities. The subsequent settlement of retired republican soldiers on captured farmland in Ulster, especially in County Down, implanted a population that was to be implacably unionist right through to the twenty-first century. This was directed to keeping the second largest of the British Isles under a London-based government, which had been the situation for four centuries. Ireland provided examples that were adopted - when deemed to be appropriate - by those who began to build the landward extensions of the maritime empire. Systematic settlement of Britons beyond Ireland began with both Puritan and Catholic 'plantations' on the east coast of North America and was extended by the capture of Jamaica in 1655. The collapse of the English Republic after Cromwell's death [in September 1658] allowed privateers [licensed pirates] to use Jamaica as their base until the most successful privateer, 'Captain' Henry Morgan, was appointed as Charles II's Governor of the island - duly honoured with a knighthood - and by bribery and by force he established a form of governance which enabled the colony rapidly to became rich on the basis of slave labour producing sugar.

Elizabethan sea captains had traded slaves from Africa to the Spanish and Portugese colonists: this appalling trade continued under the Stuart monarchy and the puritan Republic, and after 1660 the restored monarchy facilitated the traffic in humans to Britain's own plantations in the southern colonies in North America as well as to the the Caribbean islands. Colleges, cathedrals and a huge range of commercial organisations invested in slave farming for sugar and cotton, in particular. Marketing and transporting colonial produce to both UK and European markets became massively profitable activities. The ports of London, Bristol and Liverpool grew massively on the basis of colonial trade, which was primarily with the Americas but was also expanding in Asia. Charles II's Queen, Katherine of Breganza, brought as items of her dowry Tangier and Bombay: while Tangier was soon lost, Bombay was the basis for British expansion in India which created an empire [or Raj] which was surrendered only in 1947. Islands were occupied around the world to provide safe havens where British ships could take on water and fresh meat and repair storm damage, which could be developed as coaling stations when steam power was introduced in the nineteenth century. Portuguese, Dutch and British trading posts were established on the coast of Africa, originally as places where slaves could be acquired from indigenous rulers. Gibraltar [an isolated peninsula of the European mainland, which the British have treated as 'virtually an island']] was ceded by Spain under the Treaty of Utrecht [1713] after having been occupied in 1704; Malta was occupied during the Napoleonic War and ceded officially to Britain under the Treaty of Vienna that settled frontiers after the final defeat of Napoleon, and Cyprus was grabbed by Britain from the declining Ottoman Empire under the Treaty of Berlin in 1878. Britain retained 'sovereign bases' in Cyprus when the former colony was granted its independence and these have had huge importance for the USA as well as the UK as 'listening posts' in the middle east and the former USSR. Britain's scurrilous expulsion of the native people of Diego Garcia in the Indian Ocean in order for it to become an 'unsinkable aircraft carrier' for the United States [nominally under British sovereignty] and a very similar fate has befallen Ascension Island which is central to the Atlantic.

Now that all the large colonies, protectorates and other 'dominions' have been granted independence, the left-over islands alone remain from the great imperial past. Successive governments, before the present one, have largely regarded the remaining 'dependencies' as a costly nuisance. Such blind stupidity is embarrassing.
The islands [and Gibraltar] remain: they can be engaged to make Britain a leading world power yet again.

Wednesday, 16 May 2012

I interrupt my mini-series on the only truly positive prospect that faces Britain to comment on the 'new' situation in Europe following Greek and French elections.
My long-standing adherence to the view that Greece must, eventually, escape the intolerable burdens of eurozone membership is unchanged. Of course severance would be a plunge into the unknown, a choice between the devil and the deep blue sea [or, as my fellow Lancastrians put it, a choice between muck or nettles]; but the certainty of pain for Greek people while their country remains within the zone has now been confirmed. The new French President went to Berlin to agree with the Chancellor that the current EU policy must remain in place. This has been amplified this morning by the German Finance Minister who has declared that every detail of the Greek bail-out deal is part of an integrated whole and that no tinkering can be attempted without unscrambling the whole deal. The IMF has admitted that their contingency planning for a Greek exit from the euro is [necessarily] in an advanced state.
In this painful situation, British government debt is being sold at the lowest price since the modern system of public finance began around 330 years ago: London interest rates are a record lows because so many international investors are viewing Britain as a 'safe haven' for their money. They want to diminish their exposure to the euro in case a Greek exit causes 'contagion' affecting Portugal, Spain, Ireland, Italy and possibly even France. The Japanese yen has limited appeal, Brazil and Switzerland have taken steps to keep out 'hot money', the Chinese currency is not fully transferable, Indian money is not even trusted by the gold-hoarding home population and there is a limit to how many US dollars any portfolio can safely contain. So the familiar old pound sterling came under 'positive' pressure, regardless of the fact that the buyers understand the long-term fragility of the UK economy. If the UK had a government capable of capturing opportunity it would now create a huge investment pool to finance the Grand Oceanic Project that I am advocating, taking advantage of these unique monetary circumstances: but no such government is in prospect.

Monday, 14 May 2012

The first circumnavigation of the earth to be reported in English [and probably just the second ever made in a single voyage] was achieved by Sir Francis Drake and 59 survivors from his crews in 1577-80. Drake's mission had been to disrupt and despoil Spanish trade on the western shores of South America, where the Spaniards did not anticipate hostile forces to penetrate.Unarmed merchant vessels enabled him to take rich pickings for Queen Elizabeth I, including Drake's Jewel which is still on display. The difficulties of getting round the south of South America and into the ocean that Magellan had called Pacific were notorious: strong gales, dangerous coastal topography and Antarctic cold. Drake lost all his ships except his flagship, the Pelican[later to be re-named the Golden Hind]before he was in the relatively safe conditions of the South Pacific. Rather than facing a return trip around Cape Horn and running the gauntlet of Spanish ships seeking revenge, Drake decided to sail west and cross the whole Pacific, the Indian Ocean and the Atlantic. Such random raiding by English ships infuriated King Philip, who readily accepted the Pope's declaration that Elizabeth I was illegitimate as she had been born while Henry VIII's first wife [Mary I's mother] remained alive and - in the Pope's view - still married to Henry. Philip therefore concluded that it was a matter of propriety, even a religious duty, to remove Elizabeth from the English throne and coincidentally to stop English piracy against Spanish trade. He spent six years constructing and preparing a vast fleet to carry his army [Armada] from Spain to his territory in the Netherlands where even more troops and guns would augment the force in an invasion of England.

Adverse weather forced his fleet to sail up the west coast of Ireland, rather than take the simple route up the English Channel; many of his ships were damaged by the storm, some were wrecked on the Irish and Scottish coasts, and the fleet that eventually reached the Spanish Netherlands [modern Belgium] was seriously depleted. Nevertheless, in principle it was still vastly stronger than the English forces that Elizabeth had been able to assemble, largely by requisitioning commercial vessels. Taking advantage of the west wind, the English admirals in the Channel set fire to several of the commandeered ships and sent them among the anchored Spanish vessels, with significant loss to the larger fleet. The English then harassed the enemy with such effect that Philip's commander-in-chief decided that his force was too far depleted to undertake an invasion of the apparently well-defended English mainland. Vowing to have another try later, Philip reluctantly accepted the situation.

The English government had learned several important lessons: that it is possible to mobilise a significant fleet very quickly, provided the government is ruthless enough in taking shipowners' assets [including the ships' crews] and the stock-in-trade of gunsmiths, grocers, vintners, clothiers, blacksmiths, rope-makers, sail makers and the other essential suppliers. It is possible to achieve significant results with limited resources provided the commanders are sufficiently ruthless, extending to a willingness to sacrifice men and equipment. After the Queen had personally inspired the men with one of her greatest motivational speeches, and the war was won, the crews were held in bases where a huge proportion died of deprivation and disease while the government sought to avoid paying them. The commanders were highly honoured and became legendary national figures - especially Howard of Effingham and Drake - and the Victory was lauded: but the real lessons for government were that sufficient brutality towards people and ruthlessness towards owners of property can achieve amazing results: and if government propaganda is inspirational and personalised to the monarch or the supreme commander the dark side of the campaign can largely be suppressed.

These were to remain the key factors on which the English, later the British, maritime empire depended for the next three hundred and eighty years. That saga will occupy the next few blogs in this series.

Wednesday, 9 May 2012

Phoenicians from modern Lebanon established the great trading city of Carthage, on the North African coast near modern Tunis, around 1,000BC. Britain exported metals and cattle products to the Mediterranean via Phoenician merchants, and sufficient of the goods that they imported into Britain have survived to make it clear that this was a large-scale and long-lived trading relationship. For several millennia before Carthage was founded Britons made boats that were large enough to go to sea, at least in coastal waters; one of the most popular theories as to how the massive stones of Stonehenge were transported to Salisbury Plain suggests that most of the journey was made by ship. It is therefore probable that by 500BC Britons were able to sail their own vessels as far as Carthage, as well as to Ireland and to the Channel ports in what are now France, Belgium and the Netherlands.

The emergence of the Roman Republic as a trading power led to a massive war against Carthage that was waged both on land and at sea. Roman victory led to the creation of a marine-trading empire and the progressive military subjugation of cities and their hinterlands all round the Mediterranean. Julius Caesar was a marine commander before he became famous as a general: his extensive conquests in mainland Europe depended heavily on supplies brought by ship, and when his successors added Britannia to their possessions all the major cities that they established could be reached by boat upriver from the sea. The whole history of London, from the legendary pre-Roman King Lud to the nineteenth-century boom in London Docks, derived from the city's location on a strongly tidal estuary. The rising tide pushed ships upriver towards the port and the ebbing tide floated them back to the open sea. Bristol and Southampton, among many other ports, gained their prominence because of fortuitous combinations of location with the strength and consistency of the tide. Eastern Britain and islands all round Great Britain were occupied by Vikings and 'Saxons' after the collapse of the Roman Empire and from the eighth century ships from England carried trade to coastal ports around the continent. Successive emperors in Byzantium [Constantinople, modern Istanbul] employed an English Guard and both pilgrims and traders went regularly to the Holy Land.

William the Conqueror necessarily came to England by ship, and for the next five hundred years [until Calais was lost by Mary Tudor in the fifteen-fifties] English kings had possessions on the continent which were necessarily accessed by ship. The medieval period was an era of almost-constantly expanding trade, with east coast ports including Hull, Boston, King's Lynn and London prominent in shipping goods to and from Germany, the Low Countries and Scandinavia. Vast quantities of wool were exported to Italy, Belgium and France, and massive quantities of wine were brought back to England. Despite the disastrous loss of his flagship Mary Rose, Henry VIII continued investing in the new concept of a big-ship navy. His daughter Mary I married King Philip of Spain, who ruled the Netherlands and much of Italy as well as Spain and its new colonies in America and around the coasts of Africa. After Mary's early death, her sister Elizabeth I faced exclusion from the polity of European monarchs when she firmly excluded both the concept of marrying Philip and subjecting the English Church to the Pope. England's trade with the continent continued, but the threat of war - with consequential exclusion from European ports - encouraged the government to seek opportunities for trade, for possible colonisation and a prospect of state-sponsored piracy in African, American and further waters. This led to an era of High Seas expansion - of trade and of territory - that lasted until the middle of the twentieth century.

The extent and importance of sea-trade to successive regimes in England [and in Scotland, a separate sovereign entity until 1603] cannot sensibly be underestimated. The past thirty or forty years, of relatively insignificant dependency on the High Seas, is an aberration of recent history. It is also a disaster, as will be shown in the coming days.

Tuesday, 8 May 2012

The doomsters have been saying that Britain is 'exhausted' for over a century; and much earlier Sir William Gilbert had castigated people who favour "all centuries but this one and all countries but their own". A whole cottage industry sprung up during the Second World War and burgeoned after Victory, asserting that the clapped-out country could be satisfied with its gargantuan effort against the Nazis and sink through obsolescence into terminal decline softened by the smug self-satisfaction of films that extolled wartime successes while industry and commerce could slide away into foreign hands.

The United States, asserted to be Britain's greatest ally, has always been the most determined enemy of the British Empire: wartime aid was given in accordance with the 'Atlantic Charter' by which Churchill agreed that the empire would be abandoned as soon as possible. India was dumped in 1947: the Labour government was so keen to slough-off that 'problem' that they authorised their Viceroy to enforce the partition of Pakistan from India, despite the certainty that hundreds of thousands of deaths would occur immediately and decades of armed confrontation would ensue. Where the strategic interests of the USA required Britain to stand firm against communist subversion of colonial territories - as in Malaysia and Greece - the British stood fast: otherwise the abandonment of territories in which the US saw business opportunity was encouraged. An incompetently-devised and poorly managed project to produce vegetable oil in East Africa was taken as a sign that the colonies would always be loss-leaders that the could not be afforded, and the process of withdrawal was accelerated.

Britain is now left with direct responsibility only for a few scattered island dependencies, mostly in the Atlantic but with outposts in the Indian Ocean, Antarctica and the Pacific. These are seen as burdens. The Falkland Islands have become newly controversial as oil reserves are explored, and no government dares to speak of negotiations on sovereignty with Argentina while the snivelling minions of the Treasury wring their hands at the current and potential cost of maintaining sovereignty. There have been plans to build an airport on St Helena for well over half a century, but the current highly viable plan may yet fall victim of spending cuts. Because they are useful to the Americans, Ascension and Diego Garcia both serve as major mid-ocean airfields: while other tiny settlements are regarded as inescapable burdens.

This whole picture is desperately inappropriate. Adding together the coastal waters of the UK and all its dependencies, Britain has the biggest marine frontiers in the world. Within those borders - which can now be delineated exactly by satellite plotting - the boldest venture of the planet is begging to be empowered. While other nations look to monumentally expensive space exploration or the capture of asteroids, Britain has the geographical, geomorphological, biological, oceanographic and practical skills to develop its own oceanic resources sustainably and for the long term. It is so obviously a viable prospect that politicians can not be expected to recognise it until it is hammered into their heads, past the nonsense of 'The Big Society' and the petty arguments about membership of the eurozone. The world's investors would line up with open wallets, hoping to capture the cream by again allowing the British state to create and flog-off assets: and unless they are stopped the politicians would again waste the assets that the people can create. This is the last great opportunity that Britain has been given by the adventurism of our ancestors: it must be captured. If that is to be done, we can move within a decade into the comfort created by being in conformity with the Laws of Politicial Economy.

Sunday, 6 May 2012

I am legitimately criticised for the perceived circularity and negativism of this blog-series. I have laboured the point that the United Kingdom is far beyond the failure of Politics, sunk apparently-inextricably in the cycle of economic decline that has been brought upon the country by generations of deluded politicians. Most citizens would agree that the country has experienced the decline in morale that has for millennia been attributed to failed states. This week's elections have shown that politicians and commentators still vigorously play their games, seeking office because being in office office still brings patronage in greater measure than it brings odium. While conscious of the country's economic weakness, and thus its limited capacity to support a strong defence capability, politicians from all the parties that share the benefits and responsibilities of Privy Council membership have continued to maintain armed forces in support of pointless American adventurism in Afghanistan even while they have further stripped the country of the means by which its essential interests may be safeguarded.

What are those essential interests? The answer was clear in the context of Elizabeth Tudor's definitive separation of the English church and state from the European polity that had survived through the 'middle ages' in the Holy Roman Empire and the Papacy, to which her sister Mary I had abjectly subscribed. It vindicated the imperial expansion that began under Cromwell, survived the American War of Independence and climaxed in the Coronation Durbar of George V in Delhi. It was explicit in propaganda during the dogged campaign against revolutionary France and Napoleon's pseudo-Roman Empire. It was brilliantly articulated during the noble, desperate struggle against Nazism. Then is was immediately forgotten, as the chattering classes built the legend of an 'exhausted' Britain that could no longer hold its place in the world.

The central proposition about those interests is that a State must have its own independent accountability for its Economy, in order that its people can prosper: the justification for a Polity, a constitutional settlement. Such a state enables the basic Laws of Political Economy to operate with apparent spontaneity. The appearance of spontaneity was consensually abrogated in wartime [and especially in the 'total war' that was waged in 1805-14 and in 1939-45] when the state micro-managed the distribution of incomes and of rations so that the government could be believed when it asserted more elegantly the concept "we are all in this together" that is also the Leitmotif of the current coalition.

The Laws of Political Economy that were recognised and enforced in 1558 under Elizabeth I, by the Regency in the early nineteenth century and by the Liberal government of 1912 began with the Iron Law of Wages - the simple truth that a country can only be strong if the wealth it generates is at least equal to the annual consumption by the government and people. In years of crisis personal consumption must be deferred so that the state can use as much of the national product [and of the nation's credit] as it needs. If in time of war aliens are willing to lend goods and gold to assist the campaign, the nation must accept that post-war consumption must be deferred until the debt is settled. This simple truth that drove the austerity that prevailed in the Second World War and in the postwar period until the middle nineteen fifties. Then, quite suddenly, this principle was abandoned. Since then bowdlerised Keynesianism has underpinned political delusion and consequently the inevitable economic decline have prevailed.

Between 1958 and 2008 the state's wilful flouting of the Iron Law reinforced the adverse operation of the second Law of Political Economy, the Law of Diminishing Returns, which stipulates that unless an economy makes constant new investment in new technology, at a sufficient pace, the intensified use of the obsolescent technology progressively produces less output for each input of energy and materials and human labour that is put into that production. Eventually costs outstrip benefits and living standards must decline. This has happened in Britain and in most eurozone countries.The money supply was inflated massively to accommodate borrowing by firms and by families - and by the government - that funded imports from economies with higher productivity than the UK and made the consequences of the breach of the fundamental economic laws even worse. The consequences of that blatant folly surround us now.

In the next few days I will present the basis for a new polity: there is no quick and comprehensive solution to Britain's dilemma, but there is a comprehensive solution that can be begun quickly and which would produce spectacular beneficial results. It requires political as well as economic transformation. Most of the twerps who are prominent in government and on the opposition front bench can not be expected to take the point; but there is ample talent even now in the House of Commons to make a start.

Britain matters to me because I am British. Britain matters to the world because our small country gave the whole world modern industry, modern commerce and the basis of commercial law. The spectacular decline from Workshop of the World to basket-case - whose abject state is not yet recognised universally - is also an important negative exemplar for other states. If the united Kingdom can drag itself from the slough of despond into which it has sunk, it can once again be the great leader of economic and social progress.

Friday, 4 May 2012

I have been two weeks off line, as I moved home and took stock of my personal assets and liabilities. I come back to active intellectual life on the day when it is confirmed that a Chinese investment operation has bought Weetabix. The assets involved in that purchase are a modern factory in Leicestershire, Middle England, and a product range based on what [as a four-year-old] I called 'little haystacks': these are woven parcels of cereal which are usually taken with milk as a breakfast food in lieu of bread, which used to be the staple morning diet of the labouring classes. I cannot conceive the Chinese replacing their traditional regional breakfasts with this bizarre concept of 'cereals', so I do not think that the investor wants to own the brand for introduction to China. This business yields a steady return with is largely recession-proof. Thus owning it is an access point for cash income not dissimilar to public utilities in Britain that are now mostly owned by foreign investors [a recent example being the purchase of 8% of Thames Water's holding company by another Chinese investor]. Successive British governments have destroyed industry and disposed of utilities to owners who understand the value of access to captive consumers. Thus the relatively simple story of Weetabix is a perfect example of how sensible foreigners strip the cupboard bare of available assets while the British state ignores material realities.

The state is run by politicians, who play stupid electoral games which enable them to ignore the horrible truth. As two-thirds of the British electorate was determining not to vote in local authority elections [held yesterday] the Members of the House of Commons were treated to an almost-Hitlerian outburst of apparently-genuine rage by the Prime Minister, who had been summoned to defend his personal integrity in the House when he had wanted to engage in pompous speechifying in the run-up to the election. His gratuitous rudeness to the 'national treasure', eighty-year-old Denis Skinner, will be remembered long after his daft talk of a 'big society' is forgotten.

No material difference will be made to any of the dozens of boroughs that will pass from the 'control' of other parties [or no party] to Labour 'control': a pompous ex-dissident who became a Labour minister has declared that these result vindicate the leadership of the stumbling Ed Milliband; as if this will affect any substantial policy in the country. And the Prime Minister will not suddenly reconnect with the grass-roots of his party who are totally disillusioned with his coalition policies: if the coalition unravels, he will loose office in the subsequent election; not because Labour carries any confidence but by default in a low poll where many millions will simple vote against the people they despise the most.

In the upcoming French presidential election, there seem to be sharp differences between the candidates: but this is a sham. French policy is dominated by European treaties and by arrangements made under those treaties that cannot be abrogated without disastrous consequences. Immigration is a major issue; but France now has such large alien, alienated 'communities' that they can threaten such severe social and economic destruction that they have an effective veto on policies pursued by any government. The idea that an election victory somehow empowers the winner is absurd, while the participants are constrained by constitutional rules and by the courts.

The model of democracy that is derived from the British Civil War and the French Revolution is past the point of bankruptcy: that is the stark truth to which this blog returns.

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About Me

I have had a very fortunate life, in that I have been able to study the economy and Economics for more than forty years. I taught Economics, the History of Economic Thought and some Economic History at University level for over twenty years; I was CEO of an international professional Institute in financial services for more than a decade; served as head of a large Business School and have been Pro-Vice-Chancellor of a major university; and I have lectured and examined all over the world. My introductory text on insurance was translated into fourteen languages and my writings over a wide range of topics have been available worldwide.

Throughout these years I have quietly challenged the normative assumptions that underlie academic Economics; but for decades I recognised that the hegemony of dogma was so impenetrable that any frontal assault on the self-styled ‘profession’ would be brushed aside by the professoriate that had been appointed in a pyramid of patronage. Now – through the credit crunch and the even more grave sovereign debt crisis – it is very widely recognised that Economics is a failed subject: it fails to provide any adequate analysis of the situation or any new programme for moving the economy forward. The time has come for the world to understand how fundamental the failings of Economics are.

Fortunately we can begin to move forward in understanding by restating principles that were developed before Economics was set out in its modern form in the eighteen-seventies. A sound understanding of the economy begins in the recognition that all decisions and actions in the economy are taken by human individuals, acting on their own or as the agents of corporate persons [companies, registered charities etc] or as servants of international sovereign persons that are known as states [and their governments, local authorities and state agencies].

Persons are not impotent incidents in markets: markets are the creations of persons and any market can be abused or upset by persons with unusual ambition, drive, inspiration or dishonesty. This approach is followed in my simple little book, Personal Political Economy: follow the link.

In this blog I make comments on people and events from the perspective that is set out in the book: and I will not hesitate to repudiate any portion of the book – or any blog – that is invalidated by emergent reality.I thrive on criticism, and welcome it.